Department of Justice: HCA Healthcare Givin’ Doctors Financial Kickbacks is a Violation of FCA


Hospital Chain HCA Inc. Pays $16.5 Million to Settle False Claims Act Allegations Regarding Chattanooga, Tenn., Hospital

Allegedly Provided Financial Benefits to Doctors’ Group That Referred Patients to HCA-owned Facilities

Department of Justice | Office of Public Affairs
Wednesday, September 19, 2012 – Republished Oct 12, 2022

HCA Inc., one of the nation’s largest for-profit hospital chains, has agreed to pay the United States and the state of Tennessee $16.5 million to settle claims that it violated the False Claims Act and the Stark Statute, the Department of Justice announced today.

As alleged in the settlement agreement, during 2007, HCA, through its subsidiaries Parkridge Medical Center, located in Chattanooga, Tenn., and HCA Physician Services (HCAPS), headquartered in Nashville, Tenn., entered into a series of financial transactions with a physician group, Diagnostic Associates of Chattanooga, through which it provided financial benefits intended to induce the physician members of Diagnostic to refer patients to HCA facilities.

These financial transactions included rental payments for office space leased from Diagnostic at a rate well in excess of fair market value in order to assist Diagnostic members to meet their mortgage obligations and a release of Diagnostic members from a separate lease obligation.

The Stark Statute restricts financial relationships that hospitals may enter into with physicians who potentially may refer patients to them.

Federal law prohibits the payment of medical claims that result from such prohibited relationships.

“The Department of Justice continues to pursue cases involving improper financial relationships between health care providers and their referral sources, because such relationships can corrupt a physician’s judgment about the patient’s true healthcare needs,”

said Stuart F. Delery, the Acting Assistant Attorney General for the Department of Justice’s Civil Division.

“Physicians should make decisions regarding referrals to health care facilities based on what is in the best interest of patients without being induced by payments from hospitals competing for their business,”

said Bill Killian, U.S. Attorney for the Eastern District of Tennessee.

“ Improper business deals between hospitals and physicians jeopardize both patient care and federal program dollars,”

said Daniel R. Levinson, Inspector General of the Department of Health and Human Services.

“Our investigators continue to work shoulder to shoulder with other law enforcement authorities to stop schemes that imperil scarce health care resources.”

The civil settlement resolves a lawsuit, United States ex rel. Bingham v. HCA, No. 1:08-CV-71 (E.D. Tenn.), pending in federal court in the Eastern District of Tennessee under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery.

As part of the civil settlement, HCA has agreed to pay $16.5 million to the United States and the state of Tennessee, with the federal portion representing $15,693,000 of the settlement amount.

The whistleblower will receive an 18.5 percent share.

Also as part of the settlement, Parkridge Medical Center has entered into a comprehensive five-year Corporate Integrity Agreement with the Office of Inspector General of the U.S. Department of Health and Human Services to ensure its continued compliance with federal health care benefit program requirements.

This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009.

The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.

One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $9.4 billion since January 2009 in cases involving fraud against federal health care programs.

The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $13.1 billion.

The case was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Eastern District of Tennessee, the Office of Inspector General of the Department of Health and Human Services, the Defense Criminal Investigative Service (DCIS) and the Tennessee Bureau of Investigation (TBI).

The claims settled by this agreement are allegations only, and there has been no determination of liability.

Civil Division
Press Release Number:
Updated September 15, 2014

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